New Delhi: Exports are not expected to solve India’s growing surplus of ethanol, as domestic consumption has levelled off despite a sharp rise in production capacity, according to CK Jain, President of the Grain Ethanol Manufacturers Association (GEMA).
Speaking to news agency ANI, Jain said ethanol consumption has remained steady at around 1,200 crore litres, even though producers now have the ability to supply much more. He said the industry is currently capable of producing about 1,500 crore litres, but demand has not increased in line with capacity.
Jain said sending ethanol overseas is not a practical option because grain prices in India are among the highest globally. He explained that producers largely act as processors and that about 70 to 72 per cent of the ethanol price goes directly to farmers, making Indian ethanol uncompetitive in international markets.
While exports of second-generation ethanol are allowed, Jain said production of this category remains almost non-existent. He added that grain-based ethanol cannot compete on price in global markets.
He pointed out that the industry expanded rapidly between 2020 and 2022 after strong signals from the government encouraging higher ethanol blending. Based on those assurances, manufacturers made large investments and significantly increased capacity.
However, Jain said there is now a clear gap between policy expectations and actual ethanol purchases. He referred to projections that consumption would reach at least 1,500 crore litres by 2025, while production capacity was built up to around 1,770 crore litres. In reality, he said, actual allocation has remained close to 1,050 crore litres.
Addressing concerns about food security, Jain said fears about large-scale diversion of grains to ethanol are outdated. He said only about 15 to 20 per cent of the total grain output is used for ethanol, while wheat and rice procured by the Food Corporation of India remain unaffected.
He added that ethanol production mainly uses maize and damaged food grains, noting that maize has very limited use as human food. Jain said ethanol production has turned maize into an industrial crop for the first time, which has helped improve farmer incomes.
Jain said grain-based ethanol played an important role in achieving 20 per cent ethanol blending in petrol, but warned that without clarity on future blending targets and stronger domestic demand, the industry could face difficulties going forward.
